Crypto Garbage & Boies vs Brady by Mark Cuban

“If I made it into a movie, people wouldn’t believe it” Davide Boies he told me last week, marveling at the collapse of FTX e Sam Bankman-Fried before boarding his 184-foot sailboat en route to St. Barths. “It would also be interesting if you took three zeros off what happened.” Boies, the ubiquitous lawyer he represented Elizabeth Holmes, Al Gore, Harvey Weinsteinand the victims of Jeffrey Epstein, You should know. After all, he executive produced 15 films. (He was also engaged by the current WaPo CEO Frederick Ryan in a messy past DC media outing that ended up going nowhere, like my partner Dylan Byer recently reported.) The SBF saga, he told me, is one of the most fascinating cases of his career.

Boies, now 81, needed a short break. Her caseload includes hounding Google on the privacy and antitrust fronts, representing an Italian luxury heiress in a deliciously juicy fight that’s causing a mess in the financial community (more on that later), and, perhaps most surprising , lead a series of extraordinary lawsuits against the cryptocurrency sector.

It is no simple task to recover money from a bankrupt company or executive. Wall Street traders increasingly optimistic that some money could be recovered from FTX after CEO John J. Ray III, the lawyer overseeing the bankruptcy, has floated the possibility of restarting the cryptocurrency exchange. But these rescue efforts can take years-just ask Irving Picardwho continues to hunt Bernie MadoffIt’s stolen money. And litigants like Boies typically have to wait at the back of the line, behind investors, creditors, and the feds, in a sprawling criminal case like this one.

Of course, Boies is not one to wait. Instead, he has pursued an aggressive legal strategy that takes an entirely different route to the money. Simply put, he sues Tom Brady, Larry David, Gisele Bundchen, Stephen Curry and other celebrities for using their fame to entice consumers to open FTX accounts. As I’ve written before, I’m skeptical that even the best lawyer can convince a jury that these stars should have known what Bankman-Fried was up to. But Boies is undeterred. As he told me over the phone, he recently sent Brady a subpoena for a deposition, presumably the first of many.

Boies acknowledged that he is “walking a fine line of avoiding bankruptcies and criminal stays,” referring to things happening at FTX and SBF in other courtrooms that could put his case on ice. But he insists that crypto fraud is a great vehicle for a group lawsuit. “This is what the class actions needed to address,” he said she. “Life savings have been lost. Individually, it would not support a lawsuit, but together…”

I hear Boies, but I suspect it’s headed for troubled waters. That’s partly because I’ve also paid close attention to its parallel case against Marco Cubanowhich has already hit a big snag.

David Boies versus Mark Cuban

Among the first dominoes of the cryptocurrency sector to fall was Voyager, a brokerage firm that has attracted millions of customers by anticipating absurd double-digit returns. Of course, it was all too good to be true: FTX attempted to swoop in to buy Voyager for pennies on the dollar before filing for bankruptcy itself. Now around $5 billion in customer deposits are in jeopardy and Boies is on the attack, likening what happened to a Ponzi scheme.

One of its targets is Cuban, who announced an endorsement deal in October 2021 that made Voyager the official crypto partner of the Dallas Mavericks. A complaint, filed in federal court in Florida, alleges that by helping Cuban sell unregistered securities, Cuban broke various state laws and aided and abetted a fraud. Boies is expected to depose Cuban on Thursday.

Interestingly, the lawsuit originally targeted Cuban And Voyager CEO Stephen Erlich, but Ehrlich was dropped from the case once it became clear that prosecuting him would result in a delay thanks to Voyager’s automatic bankruptcy hold, which put the litigation on hold. However, as part of the lingering case against Cuban, Boies is still attempting to do so lay down Ehrlich, which caused the latter to file a new case a few days ago in Connecticut in an attempt to quash a subpoena. (Don’t be surprised if Boies pursues a similar strategy to depose SBF in the Tom Brady case.)

As for Cuban, his lawyers attacked the Boies-led case as a “strike cause, plain and simple,” which is legalese for, This is worthless garbage designed to force a hassle-free deal. And they’re challenging the jurisdictional basis to take a billionaire known to live in Texas to court in Florida.

This is where the case gets interesting and, perhaps, strategically revealing. On the one hand, Cuban insists he doesn’t have much contact with Florida, aside from owning two expensive vacation condos in Miami and attending Mavericks road games. But he may have overestimated things. After pledging under oath that he had done nothing involving Voyager in the state, Boies’ team quickly uncovered the fact that Cuban was the keynote speaker at a cryptocurrency conference last year in Miami, alongside Ehrlich. Now they’re suggesting that Cuban committed perjury, and a magistrate judge has agreed to force Cuban to testify in a deposition about his Florida ties, as well as his basis for telling the press conference announcing the sponsorship that, “I was a [Voyager] customer for several months now. I like using it.

Meanwhile, who are the real plaintiffs in this lawsuit? Initially, Boies named a dozen Voyager account holders, but only three of them were Florida residents, and it turned out that only one opened an account after Cuban touted Voyager during the sponsorship announcement. Also, that dude is a three-time felon with a history of financial fraud, according to court documents, and is now trying to withdraw from the case after a cancer diagnosis.

Boies’ team has found a couple of replacements and wants to amend the lawsuit to include a new federal lawsuit that could alleviate some of the jurisdictional challenges, but raises another dark issue: the Private Securities Litigation Reform Act, which contains a provision paused uncovered until defendant’s motion to dismiss is decided. So, within days of Cuban’s deposition, his attorneys Brown Rudnick and Fowler White are trying to squeeze Boies into choosing between a good client and an immediate discovery.

Maybe Boies will figure these things out before dealing with celebrities like Brady and Shaquille O’Neal in the case of FTX approval. Clearly, he’s pitching in very tight windows, and it’s only the first quarter. The hard stuff — convincing a judge and jury that the pitchers were knowingly involved in a conspiracy — still await.

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